US Market Outlook: Cautious Ahead of CPI, Futures Drop; Strong Q4 Earnings from JPMorgan, Intel, AMD Rise.

US Market Overview Ahead of December CPI Release

On Monday, the US is set to release the December Consumer Price Index (CPI) data, which has been underestimated for two months due to the government shutdown. The market is cautious about a potential "technical rebound." This data is crucial as it reflects US inflation and policy direction, especially in light of tariff decisions, employment signals, and political turmoil surrounding Powell.

CPI Expectations

Analysts predict a month-on-month increase of 0.3% for the December CPI, with a year-on-year rise of 2.7%. The core CPI is expected to mirror these figures. Analysts caution that the absence of October data due to the shutdown may artificially lower prices for some goods and rents in November, potentially leading to a "technical uplift" in December.

If the data meets expectations, the Federal Reserve will likely continue to await clearer trends, particularly regarding rents and goods prices. A significant deviation from expectations could prompt the market to reassess the Fed's commitment to combating inflation.

Market Reactions

As of now, US stock futures are down, with the Dow Jones futures falling by 0.2%, Nasdaq futures by 0.21%, and S&P 500 futures by 0.12%.

Notable Stock Movements

• Tech Stocks: Mixed performance in pre-market trading for major tech stocks. Intel (INTC) and AMD are showing strength after KeyBanc Capital Markets upgraded their ratings, citing strong demand for their server CPUs.

• Chinese Stocks: Pinduoduo (PDD) dropped over 5%, while Baidu (BIDU) fell more than 3%.

• Lithium Stocks: US Lithium producer Albemarle (ALB) and Chilean SQM rose over 2%, with Lithium Argentina AG increasing by over 3% amid a rebound in the global lithium market.

Earnings Reports

• JPMorgan Chase (JPM): Reported a Q4 non-GAAP EPS of $5.23, exceeding expectations. The stock rose nearly 1% in pre-market trading.

• Delta Air Lines (DAL): Reported a Q4 non-GAAP EPS of $1.55, meeting expectations, but the stock fell over 5% in pre-market trading.

• Apple (AAPL): Announced a partnership with Google to enhance Siri using Google's Gemini model, which could significantly impact their market positions.

Federal Reserve and Economic Outlook

Rick Rieder, a potential successor to Fed Chair Powell, supports lowering the benchmark interest rate to 3%. However, recent reports from JPMorgan suggest that the Fed may not lower rates in 2026, with expectations of a rate hike in 2027.

Global Market Implications

Concerns over geopolitical tensions, particularly regarding Iran, have led to rising oil prices, with predictions of potential disruptions in oil transport. Analysts warn that if tensions escalate, oil prices could spike significantly.

Conclusion

The upcoming CPI data release is pivotal for the US market, influencing inflation expectations and Federal Reserve policy. Investors are closely monitoring stock performances, particularly in the tech and lithium sectors, as well as the broader economic implications of geopolitical developments.